George Soros, the billionaire investor, has warned that German economic policy
is a threat to the European Union.

George Soros is set to ignite a fresh row over Europe this week with the launch of a new book in which he alleges that “self-righteous” and “hypocritical” German economic policy is a threat to the European Union.

The billionaire investor tells Dr. Gregor Peter Schmitz in a series of interviews collected in “The Tragedy of the European Union” that Europe is now dominated by tensions between “creditor” and “debtor” nations.

Mr Soros also says he believes the single currency has transformed the European Union from a voluntary association of equal states to one which is now no longer voluntary and has Germany as its leader.

“Germany’s tone, is sometimes self-righteous and even hypocritical, Mr Soros says. “In 2003 Germany was among the first countries to break the eurozone rules.

“In German, the word Schuld has a double meaning (both “blame” and “debt”). So it is natural to blame the debtor countries for their own misfortunes.

“But with the passage of time , Germany may become hated and resisted as an exploiter, and the European Union may dissolve in arimony.

“Germany is raising the minimum wage and pensions and permitting earlier retirement, just when it tells other countries to do the opposite.”

The German economy at the region’s heart could also be a weakness, Mr Soros says.

“What was successful in Germany before the crisis will not be successful as a prescription for the rest of Europe in the years ahead,” he argues in the book.

The prospect of Germany leaving the eurozone, Mr Soros believes, is serious, and it would have implications as the euro would depreciate sharply and the deutsche mark would increase in value. Germany would then find out how painful it is to have an overvalued currency, the book says.

Mr Soros also outlines how the problems that caused the eurozone economic crisis remain largely unresolved.

“The banking sector is acting as a parasite on the real economy,” he said.

“The profitability of the finance industry has been excessive. For a while 35pc of all corporate profits in the United Kingdom and the United States came from the financial sector. That’s absurd.

“Very little has been done to correct the excess leverage in the European banking system. The equity in the banks relative to their balance sheets is wafer thin, and that makes them very vulnerable.

“The issue of ‘too big to fail’ has not been solved at all.”

The proposed solution of a European banking union does not address the underlying problems, Mr Soros adds.

“A real danger to the financial system is the incestuous relationship between national authorities and bank managements,” he said.

“France in particular is famous for its inspecteurs de finance, who end up running its major banks. Germany has its Landesbanken and Spain its caixas, which have unhealthy connections with provincial politicians.”

Mr Soros, who famously “broke the Bank of England” by betting against the pound during the 1992 sterling crash, talks candidly about his most successful trade.

“I have a clean conscience. The big events in which I participated would have occurred sooner or later, whether I speculated on them or not.”